The importance of consultancy agreements for strategic projects
Design consultancies often provide services to their clients which involve change in the client’s business. But what about when design consultancies require change within their own businesses?
Organisational change is rarely easy, whether this is the implementation of a new IT system, rebranding or changing working practices. It is time consuming for senior management and often takes them away from client work. It may also require specific skills (for example, knowledge and experience of succession planning or employment law) which are outside the expertise of the business.
Accordingly, businesses often engage consultants to bring a strategic project to fruition.
Projects with external consultants
At the outset of any project where an external consultant will be engaged, clarity of objective is key. It is really important to carefully define exactly what you are trying to achieve, how much time you will allocate to this, who is going to be in charge of it and what budget you are allocating to it.
Design businesses are full of highly creative people and by nature, when contemplating changes, this can sometimes lead to budgets and timeframes spiralling as new ideas are thrown into the mix. A change in IT, for example, which could be as simple as changing from a desktop to touch screen system, can very quickly become unfocused.
It is imperative, therefore, for management to set parameters by stipulating what the project is going to be about, to manage expectations and to limit aspirations internally, to ensure the project remains on track. Once this is agreed internally, the consultant(s) can come in to help deliver the project according to the business’ instructions.
Sometimes it may be difficult to stipulate the operational requirements of the project in advance. In this case, the alternative is for the design business to define what is required from the project and to then ask the consultant for advice as to the best way of achieving that outcome.
Typical terms for engagement of a consultant
Every project is different, and some projects may not require a formal contract (for instance, in our experience, it is rare for a client to require a formal contract of its solicitor because both parties know what services the solicitor will provide).
However, there should be some formal record of the agreed terms for the engagement of a consultant.
These could simply be an exchange of emails – provided they are worded in such a way to make it clear that both parties accept them – or a full, written agreement.
Typical terms of a consultancy agreement would include:-
- Details of the parties – both the client and the consultant.
- A reasonably clear explanation of the project and the expected outcome.
- The obligations of the consultant towards achieving that outcome (sometimes there will be more than one consultant, for example an architect and a builder).
- The expected project duration.
- The expected cost and method of payment.
- The support to be given by you as the client (for example whether you will arrange for the consultant to have access to your offices at the weekend).
- Milestones for achieving the expected outcome and the final milestone when both parties accept that the outcome has been achieved.
- The expected course of action should the consultant become ill or incapacitated.
- What happens if you, the client, becomes dissatisfied with the service of the consultant – can you terminate the contract and, if so, upon what terms?
- Post-outcome responsibilities – will equipment have warranties, and will you be able to enforce those warranties without having to go through the consultant?
- Where appropriate, intellectual property licences (this is particularly important where software is being written for you or if there is artistic or literary creative work to be produced).
- Protection of your own client’s commercially sensitive information.
- No poaching clause – you do not want the consultant soliciting your best designer.
- Confidentiality clause – consider whether the consultant might get any access to your specialist know-how. If that is a risk, then you need to ensure that the consultant cannot use your specialist know-how for any other purpose or, more importantly, give it to your competitors.
- If you have particularly commercially sensitive clients then you may require more substantial confidentiality arrangements not only for the consultant but also for all of the consultants, employees and sub-contractors.
- A clause to the effect that the contract is governed by English law and is subject to the jurisdiction of the courts of England and Wales.
Battle of the forms
Well managed design businesses will have terms of business for their clients and should also have terms of business for their suppliers.
Some consultants and contractors will have their own terms of business and this can lead to the so-called “battle of the forms” whereby each party gives the other their terms of business and nobody quite knows which set of business terms actually applies to the contract. It is important to avoid this, which may require head to head negotiation.
Provided both terms of business are reasonable, it may not particularly matter which set of standard terms apply. Currently the norm is to accept the other side’s terms of business, but to have an agreed modification to them for those parts of the terms of business that are too unreasonable or harsh.
Role of the solicitor: As usual if there is uncertainty or controversy then you should consult your solicitor.
Legal advice for DBA members:
Your business can benefit from a free half hour of legal advice on any number of subjects from the DBA’s legal partner Humphries Kirk. If you require help negotiating a commercial contract or have another legal query, please contact James Selby-Bennet at Humphries Kirk. See the DBA member access details here.
Maarten van den Heuve, Unsplash
William Warby, Unsplash
Daniel Schludi, Unsplash
Sharon McCutcheon, Unsplash
Charisse Kenion, Unsplash